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International comparison of bubbles and bubble indicators

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Abstract

The purpose of this paper is to analyze the financial turmoil of the US subprime loan crisis of mid-Noughties and to compare it with the Japanese asset bubble of late 1980s. While examining the two crises, it compares the monetary policies of both countries, focusing on the excess liquidity and expansion of bank loans that were seen. This paper develops several bubble indicators, including the ratio of real estate loans to total loans, the loan-to-GDP ratio, and housing affordability. In order to develop these indicators, it is necessary to compare banking behavior in both Japan and the United States, as banks in both countries were making loans beyond the point of profit maximization. Property prices and monetary policy in both countries influenced banking behavior significantly. The bubble indicators developed in this paper can be used as early warning indicators for future bubbles.

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Author information

Authors and Affiliations

  1. Keio University, Tokyo, Japan

    Naoyuki Yoshino

  2. Director, FSA Institute, Financial Services Agency, Government of Japan, Tokyo, Japan

    Naoyuki Yoshino

  3. FSA Institute, Financial Services Agency, Government of Japan, Tokyo, Japan

    Tomoya Nakamura & Yoshitaka Sakai

Authors
  1. Naoyuki Yoshino
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  2. Tomoya Nakamura
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  3. Yoshitaka Sakai
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Corresponding author

Correspondence to Naoyuki Yoshino.

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Yoshino, N., Nakamura, T. & Sakai, Y. International comparison of bubbles and bubble indicators. AI & Soc 29, 427–434 (2014). https://doi.org/10.1007/s00146-013-0469-8

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  • DOI: https://doi.org/10.1007/s00146-013-0469-8

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